How to Successfully Finish Your Chapter 13 Bankruptcy

When faced with overwhelming debt, Chapter 13 bankruptcy exists as a form of debt relief, enacted by the federal government. Chapter 13 bankruptcy, or repayment bankruptcy, is an alternative to Chapter 7 bankruptcy, which is often referred to as a liquidation bankruptcy. Individuals with additional monthly income, and who own significant assets are typically better off filing Chapter 13 bankruptcy as it allows the debtor to keep the majority of their property while creating a three to five-year plan to pay back their creditors. In a Chapter 13 bankruptcy repayment plan, you must devote all your disposable income towards paying back what you owe, which can be difficult for someone who hasn’t been financially well disciplined. Because of this, we have put together some helpful hints that anyone can apply to their Chapter 13 repayment plan to increase their chances of successfully paying off all debt and to successfully finish your Chapter 13 Bankruptcy.

Why Chapter 13 Bankruptcies Fail

Firstly, it’s important to note why some individuals fail to complete their Chapter 13 bankruptcy. If you fail to meet the bankruptcy court and trustee’s obligations under Chapter 13 bankruptcy, your case is dismissed, which means that none of your debt is discharged and you will end up right back where you started at the beginning of the process. The average success rates for Chapter 13 bankruptcy cases on a national level hovers around 33%. Because of the long time frame of Chapter 13 bankruptcies, unexpected expenses or financial changes are one the leading causes of bankruptcy case dismissal or conversion to Chapter 7 bankruptcy.

Additionally, individuals who don’t obtain the assistance and counsel of bankruptcy attorney are by far less likely to successfully finish a Chapter 13 bankruptcy than those who hire a bankruptcy lawyer. Some number have quoted a dismal 1% success rate for those who file bankruptcy without a bankruptcy attorney.

Tips on Living During Your Chapter 13 Bankruptcy

You should mentally prepare yourself that while the Chapter 13 bankruptcy process can be difficult to live with, once finished, you will be in a much better financial position without a stress-inducing amount of debt hanging over your head.

The beginning of your Chapter 13 bankruptcy is perhaps the most crucial. There are an abundance of bankruptcy papers that must be filed properly, as well as, with honesty and accuracy in order for your Chapter 13 case to be confirmed. If you are organized and have copies of all your bank statements, tax returns, and pay stubs, your case will have an easier beginning and will thus make the entire process easier.

Making and living on a budget is often the most difficult for individuals to do while working to complete a Chapter 13 bankruptcy case. For many clients, it’s the first time in their lives that they have had to live on a strict budget. How you outline your budget, therefore, is of the utmost importance. Making a realistic budget, which cuts out discretionary things that you can live without will increase your chances of a successful discharge.

Lastly, staying in touch both your bankruptcy attorney and the bankruptcy trustee assigned to your case will help you finish your Chapter 13 bankruptcy repayment plan. During the course of the bankruptcy you will most likely receive correspondence from your lawyer and the trustee and responding in a timely manner will help alleviate stress and improve your chances of finishing your bankruptcy.

Chapter 13 is a powerful debt relief tool that can help you wipe out certain debts, keep your property, and avoid wage garnishments, foreclosures, repossessions, and lawsuits. Completing the process and receiving a discharge hinges on your ability to mentally prepare yourself to be “in it for the long haul”, taking extra care to fill out all bankruptcy papers thoroughly and honestly, staying on budget, communicating with your Citrus Heights bankruptcy attorney and the bankruptcy trustee.